Question

The budgeted expenses of three departments of Raja engineering company for

the year 2014- 15 are as follows:

A B C

Direct material 120000 95000 90000

Direct wages 115000 80000 80000

Factory overheads 95000 65000 63750

Administrative

overheads

20000 20000 12000

Direct labour hours 1000 13000 7500

The company recovers factory overheads at direct labour rates and administration

overheads as percentage of factory cost. The direct costs and labour hours incurred on

job number 26 completed during the year are as follows:

Department A Department B Department C

Direct material 6000 5000 4000

Direct wages 4200 3300 2250

Direct labour hours 1000 1200 600

What price should be charged for job number 26 to include a profit of 10% on cost?​

Answer 1

Answer:

First, determine which material costs are direct costs for the product. Add these together to get the total direct materials. Next, calculate the labor costs for all employees who worked on the product. Add these together to get the total direct labor costs